Tomorrow morning the May jobs report will be released. Earlier today, ADP’s National Employment Report showed private sector employment increased 253,000 (seasonally adjusted) while the median forecast for tomorrow’s report is 185,000 according to data available at MarketWatch.com. Solid numbers tomorrow would confirm the U.S. labor market remains on reasonably firm ground.

Over the past sixteen years, the market has not responded favorably on June’s jobs report day. DJIA has advanced seven times while S&P 500, NASDAQ and Russell 1000 have advanced just six times on the day. Russell 2000 has the best record with eight advances and eight declines Average losses range from 0.46% for DJIA to 0.62% for NASDAQ. If tomorrow’s number beats expectations, then the market could easily overcome its recent poor track record.

NASDAQ Seasonal Sell Signal Status

Although the “Best Six Months” for DJIA and S&P 500 have officially come to an end, NASDAQ’s “Best Eight Months” (November through June) is still in progress. As of the market’s close yesterday, both the faster and slower moving MACD indicators applied to NASDAQ were positive. With NASDAQ’s modest gain today, a one-day decline of over 1.3% (81.49 points) would be needed to turn NASDAQ’s MACD Sell indicator negative.

When NASDAQ’s MACD Sell indicator becomes negative, we will issue our NASDAQ Seasonal MACD Sell signal and begin clearing out remaining technology and small-cap positions held in the Almanac Investor ETF Portfolio. We will also review current holdings in the Stock Portfolio and take action where needed.

In the meantime we will enjoy the rally while it lasts. It is not uncommon for the market to continue to rally after we issue our Seasonal MACD Sell Signal for DJIA and S&P 500. However, past rallies have been of limited duration and often just a few percentage points of additional gains. (Yes, there have been exceptions such as 2013’s QE fueled summer rally) This strength has been an excellent opportunity to begin to wind down long exposure ahead of frequently turbulent August and September.

Even though DJIA, S&P 500 and NASDAQ all closed at new all-time highs today, there is at least one worrisome sign that trouble could be brewing. Market breadth is not as robust as would be expected. The NYSE Composite Advance/Decline line along with S&P 500’s Advance/Decline line are trending higher and are at or near highs, but NASDAQ’s and Russell 2000’s Advance/Decline lines are not in clear uptrends nor near highs. If the majority of an index’s components are not advancing, it stands to reason that at some point the index will also stop advancing. If NASDAQ’s leadership breaks down, then there could easily be a typical summer pullback or correction.